The Chapter 7 Bankruptcy Means Test

Generally speaking, most people who file for bankruptcy are only seeking a way out of a desperate situation. They are not trying to cheat anyone or dodge responsibility. However, there has been a persistent fear among the general public that too many people are filing for bankruptcy unnecessarily.

In 2005, these fears were addressed in the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which was signed into law by President George W. Bush. The Act spells out several new policies that make it more difficult for people to file for bankruptcy. This is especially true for those who wish to file under Chapter 7.

Austin Chapter 7 bankruptcy lawyers Slater, Kennon & Pugh Ltd.LLP, want to help people in difficult financial situations. To learn if you qualify for Chapter 7 bankruptcy, call our offices at 512-338-1100.

What is the Means Test?

Families and businesses must take several steps to prove they qualify for bankruptcy. The largest one is the means test, which is a financial analysis conducted by the Internal Revenue Service. If your family’s or business’s monthly income is less than the mean income for your area, you will likely qualify.

However, if you are earning more than the mean monthly income, the IRS will further evaluate your finances to see if you can afford to pay about $100 a month. If they decide you can, you will have to file under Chapter 13, or find another way to manage your debts.

The formula used to conduct the means test is quite complex. It will consider your regular income, savings, assets, and expenses. A qualified Austin Chapter 7 means test lawyer can help you decide if you are likely to pass.

Contact Us

To speak with experienced Austin Chapter 7 bankruptcy means test attorneys Slater, Kennon & Pugh Ltd.LLP, contact our offices at 512-338-1100.